Greece’s fiscal situation has significantly improved over the last two years, Senior Vice President at Moody’s says

“Greece’s fiscal situation has significantly improved over the last two years. The Greek economy is growing again and new job positions are being created. Now that the adjustment programme has been concluded successfully, business and consumers confidence is expected to rise,” Kathrin Muehlbronner, Senior Vice President at Moody’s Investors Service, said in an interview.

“The prospect of the B3 assessment is positive. This means that there is still room for improvement. The positive outlook mainly reflects the dynamics of the economy to grow in the coming years faster than expected, as the reforms that have been made so far are bearing fruit,” said Muehlbronner, who was in Athens to participate in the Capital + Vision 2018 conference organised by the Hellenic Chamber of Commerce.

Asked about Greece tapping the markets, she estimated that “the Greek government has the advantage to wait before tapping the capital markets, given its large reserve of liquidity. However, long waiting creates risks – especially because we have to calculate it with the interest rates rising.”

Greece has not yet attempted to tap the markets, she explained, because of “the rising yields on Italian government bonds.”

On Greek pensions, she said that “discussions with eurozone creditors on the need for these additional reductions of 1 pct of GDP in 2019 have not been concluded. However, we noted that both the European Stability Mechanism and the International Monetary Fund are of the opinion that these pre-legislated measures should be implemented at least partly.”

Regarding the possibility of turbulence in the eurozone and Greece, because of Italy, she pointed out that because it is the third-largest member of the eurozone, “what is happening there is important for the whole eurozone.”

However, she said that “turbulence will be contained to Italy and will not spread to other countries” and stressed that “Moody’s currently maintains a positive outlook for four of the 19 eurozone countries, including Greece, while other countries maintain a stable outlook.”

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